Lean Thinking in the Office - Change Management Associates

Lean Thinking in the Office

Organize administrative and office processes by value stream rather than function By Drew Locher

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n t heir l a ndm a r k tant, but by limiting lean efforts book Lean Thinking, James to this, organizations fail to Womack and Daniel Jones implement the key lean concepts wrote that all companies are of standard work, flow, pull, and typically involved in three prileveling. In turn, they fail to realmary value streams—or some ize the full benefits of lean. combination of the three: Why have so many companies 1. Physical Transformation struggled with the application (manufacturing companies); of commonsense lean concepts 2. Problem Solving (engineerto office and administrative ing and design companies, as processes? When asked, compawell as many service organizanies often reply that the nature tions); or of work performed in the office 3. Information Management is “different.” When pressed for (which most all companies are clarification, they most cominvolved in to some degree). monly cite the variability of the If the goal of an organization work, the multi-tasking that is to be a lean enterprise, then goes on, the unpredictability of the intent is to apply the comdemand, and the creative nature monsense business practice s of the work. embodied by lean thinking to all The truth of the matter is that areas of the business. In manuwork performed in the office facturing applications, there does tend to be highly variare many well-documented able. However, this occurs for successes. However, much of several reasons, most of which the untapped potential for are created by the companies improvement in an enterprise’s themselves and how they orgaproductivity lies beyond the nize themselves to process shop floor in non-production information. Much of the untapped potential for improvement in an enterprise’s areas. Service organizations and productivity lies beyond the shop floor in non-production areas. administrative processes within Organizing for If the goal is to be a lean enterprise, then apply lean business manufacturing companies have Optimum Performance practices to all areas of the business. struggled with applying these One of the most formidable concepts (the second and third obstacles to the application of primary value streams identified above). When companies do try to apply lean to applying lean thinking to office and adminOne of the major difficulties companies the office, most companies focus simply istrative processes is the existing organihave in applying lean principles to nonon trying to better organize the workplace zational structure. Most companies are production operations is their inability through 5S techniques, often translated as organized by functions or departments to apply systems thinking in identifying Sort, Straighten, Shine, Standardize, and that have little relationship to the informavalue, waste, and flow in the office. Sustain. These 5S techniques are importion they actually process. Experience has

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E n v i ro n m e n ts march.april. 2008

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shown that in most cases functional strucsee the application of lean—is to identify key services: order processing; probtures impede the flow of information. They “service families.” Here a team will idenlem solving (this may include providing can result in parochialism where managtify the key services that are being delivtechnical support, order status, or order ers may be responsible for portions of the ered by a department or function. They maintenance); and value creation (pro information flow, but nobody is responbegin to see the “processes” that are being actively generating sales). sible for the management and continuous regularly performed, and realize that they Unfortunately, so much time is spent on improvement of the overall process. More are not adequately organized by service providing the first two services that little specifically, they tend to add to the numor process. time is left for customer service personber of hand-offs and often nel to create more value for give rise to conflicts of prithe business. What if the perTime Monday Tuesday orities between departments. sonnel within the Customer Budgetary practices can furService department were 9:00 – 9:30 a.m. Check e-mail Check e-mail ther increase the likelihood organized by these three ser 9:30 – 10:00 a.m. and effects of these conflicts, vice families? How would this Enter orders Enter orders 10:00 – 10:30 a.m. contributing to turf battles. lend itself to greater organiThis is no different from zation of the activities? What 10:30 – 11:00 a.m. Unscheduled work Unscheduled work what used to be seen in manwould be the impact on the 11:00 – 11:30 a.m. Process RMAs Work on Order Holds ufacturing where functional effectiveness and efficiency organizations existed with of these activities? Can variEtc. Etc. Etc. separate machining, assemability be reduced and stanbly, quality assurance, and dard work achieved? Table 1: An Example of “Plan for Every Process” even packaging and shipEven if the same resources ping departments. While are expected to perform multhis approach may have tiple tasks, can we better optimized performance of the individual Servicing the Customer organize the completion of these tasks? functions, it was often at the expense of One example is Customer Service. Often Too often office personnel are left on their overall process or system performance. customer service personnel are involved own to decide how and when to perform Many manufacturing organizations have in numerous activities, all of which fall the multiple tasks expected of them. The realized that they must change the fundaunder the umbrella function of “customer problem that this creates is that each permental way they are organized in order to service.” Personnel are then expected to son in the office may organize himself or realize breakthrough results in improved determine the best way to organize themherself in a slightly different way. The timmaterial and product flow. Office environselves—whatever works best for the indiing of the completion of work may not be ments are just starting to come to the same vidual. The result is a very unpredictable, appropriate, and the prioritization of work conclusion. highly variable work environment, with inconsistent through the value stream. The objective must be to optimize the little or no standard work throughout. Once again, this contributes to the probperformance of the overall system—the However, an alternative would be to lem that is found in the office—the unpre“value streams.” The ongoing continuous organize by “service family.” Typically dictability of the movement of work from improvement of key business systems or customer service personnel deliver three one step to the next. value streams must also be insured. This can be accomplished by organizing and Planning for Every Process managing by value streams, what some What if a “plan for every process” was have called “end-to-end” process managedeveloped for all of the key information ment. Consider an organizational strucprocesses in the office? The plan would ture based on actual information flows, define specific days of the week and times for example, “order to cash,” “requisition to of the day for the performance of each pay,” etc. What advantages would the orgatask. Further, the plans for different peonization realize by having order processing, ple (i.e. roles) in the office will be synchroplanning, invoicing, and collection personnized with each other to maximize the flow nel working together as a team rather than information. In such a way, tremendous as separate departments? What would be predictability can be provided to the multithe disadvantages? tasking work environment. Each person The concept of organizing by inforknows what to do and when. Simultaneous mation process can be applied even at processing of different information by the the department level. One of the breaksame person can be avoided, which can through exercises—when people begin to provide significant productivity improve©iStockphoto.com/ Christine Balderas

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Steps to a Lean Office 1. Identify service families. 2. Define standard work for each process, including improving workplace organization through “5S” techniques.

3. Cross-train personnel. 4. Implement basic pull systems, including leveling and visual management techniques.

5. Implement office cells, where appropriate.

6. Drive continuous improvement using visual management techniques implemented as part of the first five steps. GSS-NASFM_ad-4c_Mar08.qxd

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ments. It is typically easier for someone to perform one task at a time than attempting to do three things at once. In our Customer Service example, trying to answer the phone while entering an order can give rise to possible errors and increase process time. Can developing a plan for every process minimize the number of disruptions and interruptions? This is analogous to the “plan for every part” concept applied in manufacturing—where delivery times and quantities are set for every part used in the manufacturing process. An example of such a plan for every process is provided in Table 1. More and more organizations are setting up office “cells” or “pods”—crossfunctional teams of people, co-located to process information in fractions of the time previously required. Experience has shown that lead time, including queue time, can be reduced by as much as 90 percent, while process time (the “touch time”) can be reduced by as much as 40 percent.

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Office cells can improve the effectiveness and efficiency of communication and decision making, while reducing quality defect or correction waste. They can also reduce the number of hand-offs, and help develop a greater awareness of the needs of “internal” customers. The result is the reduction of non-value-added waste throughout the value stream. Two examples of office cells are provided in Figures 1 and 2. In addition, some organizations have effectively installed “pull systems” in the office to control the flow of information and to “pull” resources to maintain flow when interruptions occur. In its most basic sense a pull system is a decision tool. A pull system consists of establishing acceptable levels of work-in-process (WIP), providing visibility to the queues of work at key points in the process, and establishing rules that people will follow when particular levels are reached. When necessary, resources are re-assigned in order to maintain the flow of informa-

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tion through a particular segment of the process or value stream. The most common form of pull system used in the office is a sequential pull system. The desired sequence may be first-in-first-out (FIFO) or due date for project-oriented work. Standard Work Practices “Standard work” practices for each process are required in order to maximize the benefits of pull systems in the office. People within the office must be crosstrained in the standard work so they are ready to lend assistance when a “pull signal” directs them to do so. This leads to one of the least practiced of all lean concepts—standard work. Too often, it is left up to individual office personnel to determine the best way to perform work—what works best for them as individuals. What difference does it make how the process is performed, as long as the work is completed? This statement, commonly heard, flies in

Figure 1: Several multi functional “Order-to-Cash” cells, where each team includes representatives from Customer Service, Planning, Accounting, and Collections. Customers are assigned to teams in a way that “levels” the demand across teams.

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1 Position 2

Position 1 Begin

Figure 2: An Order Processing cell where each order requires some amount of designing. Three different functions have been co-located. Position 2 is duplicated based on the level of effort required for this task to meet demand.

3 orders

Order Flow End

2

Position 2

Position 3

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the face of a foundation concept of lean. Lean enterprises seek to have consistent ways of performing all tasks—best practices, if you will. Standard work: • reduces variability; • provides more predictable processes; • reduces the learning curve for new employees; • results in greater flexibility as resources can be effectively moved around when necessary; • provides a means to identify nonstandard conditions that management must act upon; and • lays a foundation for continuous improvement. Sustaining and continuously improving standard work practices is one of the most important responsibilities of managers. However, very few managers see this as part of their role. Finally, lean seeks to level work through the process. Certainly some of the concepts discussed above, such as “plan for every process,” will help to level work and

Figure 4: Two examples of leveling work in an office are shown above. Each breaks work down into two-hour buckets (literally). This helps to insure that work is being completed in a smooth and steady way. The visual organization allows for easy determination of whether the two-hour goals are being met. If not, action can be taken to maintain flow. Perhaps a “pull” system is triggered.

Office personnel often do not view what they do as batch processing. Typically there is no set batch size or quantity. However, tasks are performed at certain frequencies. In other words, information is allowed to queue up for a period of time, before it is processed and moved on to the next step. This is, of course, the classic definition of “batch.” T he ke y i s to perform work frequently enough to reduce the pile of work making its way through the system. Leveling should be considered when developing the plan for every process. In this way, the Figure 3: When volume exceeds capacity based upon color folder variability in work system, flag is changed to red—triggering pre-established personnel content and in the to come support this process. movement of work ca n be reduced, improve flow. The arrival, or movement thereby providing levelness through of work from step to step, can be better the system. planned as “throw it over the wall” (i.e. The month-end closing process is an “push”) practices are eliminated. The pull example of “un-level” work. Most comsystems previously described will help panies wait until the end of the monthly systems regain level when they become reporting period to initiate month-end imbalanced. Another lean concept that closing activities, resulting in a spike in can effectively level work is “ batch demand on the resources expected to perreduction.” form this work. These resources become

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stressed, frustration levels increase, and other work is pushed aside until monthend close has been completed. However, the fact of the matter is that as much as 75 percent of month-end closing activities do not have to wait until the end of the month to be performed. What would be the benefits of leveling the work on these resources throughout the month? In fact, the manner in which people and companies organize—or not—their activities contributes to the very problems that they believe make lean not applicable to the office environment. Once companies recognize this, they can begin to overcome their bias that the office is “different.” At that point, the clouds start to lift from their eyes, and they can clearly see that lean thinking most certainly applies.

For More Information Drew Locher is managing director of Change Management Associates, based in Mt. Laurel, N.J. which provides lean enterprise consulting and organizational development services. He is also co-author of The Complete Lean Enterprise: Value Stream Mapping for Administrative and Office Processes, and the upcoming Value Stream Mapping the Development Process: A How-to Guide to Streamlining Time to Market (June 2008). Contact him at 856235-8051, [email protected], or www.cma4results.com.
